How Do I Get Out of Student Loan Debt?

by Jordan Meyers

After graduation, it's time to start repaying student loans.

Student loans can be lifesavers when it comes to affording the rising cost of higher education. They're not so wonderful when the bill comes due, however. Fortunately, there are some options if you are having trouble keeping up with your student loan bills. You may request a deferment, forbearance or even loan forgiveness in some situations. In addition, you may consider a consolidation loan or an alternative repayment plan to keep you from defaulting on your student loans.

Seek a student loan deferment. This will allow you to avoid paying the principal on your loan for a set period of time. You may have the choice of whether or not to pay interest on the loan during this time or allow it to accrue. Deferments are granted for the first six months after you graduate or leave school as well as during times of economic hardship or difficulty finding a full-time job. Some loan programs may provide deferments for other reasons as well. For example, you may receive a deferment if you are on active duty in the military. A deferment is your right as long as you meet the loan program's criteria for obtaining one.

Apply for a forbearance to put off your student loan payments but continue paying interest. Unlike a deferment, you do not have an automatic right to a forbearance. Whether or not to provide one and the length of the forbearance is up to the lender. A forbearance may be granted if you are experiencing a financial hardship or a life circumstance that prevents you from paying. In addition, you may receive a forbearance when you are teaching in an area in which there is a shortage of teachers.

Request a student loan cancellation. In most cases, student loans are not canceled, even in cases of severe financial hardship. However, some student loan programs will cancel loans for people who commit to teaching or practicing medicine in low-income areas. Some programs also offer loan forgiveness for certain types or volunteer or public-service work. Your lender may also cancel your loan if you become permanently disabled.

Request an extended repayment plan to stretch your payments out over a longer period of time. This may result in a lower and more manageable monthly payment.

Ask for a repayment plan that is contingent on your income. Some loan programs will tailor your repayment schedule to your current income, considering your debts as well.

Tip

Some types of student loans are not dischargeable in bankruptcy proceedings.

Warning

Avoid defaulting on your student loans.Those you receive through government-sponsored programs can follow you around indefinitely, ruining your credit, disqualifying you from other government-sponsored financial programs and leading to the seizure of your tax returns. Defaulting on loans made from private lenders may result in a lowered credit score, lawsuits and liens on your assets.